Lifetime Exemption

In the United States, the lifetime exemption is the total amount an individual can transfer free of federal estate and gift tax, counting both gifts made during life and assets left at death. From 2026 the exemption is set at US$15 million per person (US$30 million for a married couple) and is indexed for inflation in later years. Lifetime gifts above the annual gift tax exclusion draw down the exemption, and whatever remains shelters the estate at death; transfers beyond it are subject to federal transfer tax. The exemption is portable between spouses, meaning a surviving spouse can generally use a deceased spouse's unused amount.

Why it matters for family offices

The exemption is the central planning number in US estate strategy, and for family offices it behaves like a budget to be spent deliberately. Families typically decide which assets to give during life (often those expected to appreciate, so future growth escapes the estate), which structures to fund, such as dynasty trusts or sales to grantor trusts, and how to coordinate the exemption with its close cousin, the generation-skipping transfer (GST) exemption, which protects transfers to grandchildren and beyond. Because the amount is set by statute and has changed with legislation over the years, planning also carries a timing dimension: families and their advisers watch the law and often act ahead of scheduled changes.

How it shows up in practice

In practice the exemption is a ledger that must be kept for every family member over decades. Each significant gift is reported on a US gift tax return (Form 709), which records cumulative gifts and remaining exemption; at death the estate tax return (Form 706) draws the threads together. Consider a couple funding a dynasty trust for their grandchildren: the office coordinates valuations for the gifted assets, files the returns, allocates GST exemption to the trust, and updates its running tally of exemption used and remaining for each spouse. Because the consequences of an error surface years later, often in an audit or at death, family offices treat this tally, and the documents behind it, as permanent records that must survive staff changes and system migrations.